5 ms·

Isn't this sort of a strange comparison, though: income, which is liquid, vs equity, which usually isn't? Since most homeowners live in their investment and pr

Isn't this sort of a strange comparison, though: income, which is liquid, vs equity, which usually isn't? Since most homeowners live in their investment and prices have risen almost everywhere, there's no way to cash out on the investment and remain housed. You would have to sell and gamble on renting until a market correction, or moving to a cheaper housing market, or own multiple properties to be able to actually cash in on this equity earning .. whereas of course income is just cash Maybe I'm missing something

lanstin 5y ago
You can easily borrow against equity. You can skimp on saving for retirement hoping to move to Montana and live off the extra equity.
- lanstin 5y ago
  Note to Montanans: just a random example of a place with lower than CA real estate. In reality after ten years in Bay Area most people cannot tolerate a cold winter nor a hot summer. I think Mexico or “that state I grew up in” are more popular. Although I have cousins that moved to Colorado and Texas after fifty years in California.
commandlinefan 5y ago
“Equity” is also theoretical until you try to cash in on it: they say your house could sell for $1MM, but you have to find a buyer before you can get that equity out and spend it. You may very well have to sell it for (a lot) less. It’s also a liability every year when the tax man comes, because he charges based on the “imaginary” number, not what an actual person will actually pay for it.
- biggc 5y ago
  The second part isn't exactly true in California. Thanks to Prop 13 homeowners' property taxes usually don't increase in proportion to their value.
- m-ee 5y ago
  As mentioned by the other poster, prop 13 makes the surprise tax bill situation moot. And in this current market you will not have to sell for less. My sister in law recently accepted an all cash offer for more than asking price. Made about $500k in 4 years.
- xsmasher 5y ago
  You can access the equity with a second mortgage, a home equity line of credit, or a cash-out refinance.
sybarita 5y ago
Sure but the point is these already wealthy people gain all this wealth for doing literally nothing, while the people who slave away and actually keep the economy going work hard all year for much, much less. And then of course workers end up having to hand most of that "cash" directly back to the land-owning classes for rent (among other things). Homeowners could cash out on their investments and remain housed by getting jobs and renting, like the rest of us, which of course they won't do, because they recognize how exploitative the system is and that they earn more just sitting on property. Anyway you look at it homeowners come out way ahead every time, for doing absolutely nothing.
- deleted 5y ago
  [deleted]
- lotsofpulp 5y ago
  > Anyway you look at it homeowners come out way ahead every time, for doing absolutely nothing. Homeowners in less demanded areas do not.
  - sybarita 5y ago
    I mean sure, and some "workers" make 500k/year, but these are obviously exceptions to the rule when we've established that California homeowners made more money in equity on average than workers made in income. Also pretty sure there aren't many places in California where owning a home is such a liability that your annual losses would exceed those of one renting a comparable property. You might still have to work, but you're still ahead of someone who has to work and pay rent.
    - deleted 5y ago
      [deleted]
  - ethanbond 5y ago
    They reliably come ahead of the laborers in those same areas
- 5y ago
jollybean 5y ago
Buying and selling a house isn't that much harder or riskier than changing jobs, but it's a little besides the point. We are in a form of inflation. The 'middle class' are the problem here. Why? Because they think 'they're making bank'. What they don't realize is that 'everyone above them' on the scale, is making even 'bigger bank'. The $3M home owner realizes this, but also not quite how much the $25M home owner is also screwing him. This is a 'class warfare ponzi scheme' where everyone up the chain is screwing everyone below them. The problem is that it's politically untenable to take away something from the middle class, they are voters. If working class and poorer people coordinated their voting power, the kind of Fed policies we have would be different.

lanstin 5y ago

You can easily borrow against equity. You can skimp on saving for retirement hoping to move to Montana and live off the extra equity.

lanstin 5y ago
Note to Montanans: just a random example of a place with lower than CA real estate. In reality after ten years in Bay Area most people cannot tolerate a cold winter nor a hot summer. I think Mexico or “that state I grew up in” are more popular. Although I have cousins that moved to Colorado and Texas after fifty years in California.

commandlinefan 5y ago

“Equity” is also theoretical until you try to cash in on it: they say your house could sell for $1MM, but you have to find a buyer before you can get that equity out and spend it. You may very well have to sell it for (a lot) less. It’s also a liability every year when the tax man comes, because he charges based on the “imaginary” number, not what an actual person will actually pay for it.

biggc 5y ago
The second part isn't exactly true in California. Thanks to Prop 13 homeowners' property taxes usually don't increase in proportion to their value.
m-ee 5y ago
As mentioned by the other poster, prop 13 makes the surprise tax bill situation moot. And in this current market you will not have to sell for less. My sister in law recently accepted an all cash offer for more than asking price. Made about $500k in 4 years.
xsmasher 5y ago
You can access the equity with a second mortgage, a home equity line of credit, or a cash-out refinance.

sybarita 5y ago

Sure but the point is these already wealthy people gain all this wealth for doing literally nothing, while the people who slave away and actually keep the economy going work hard all year for much, much less. And then of course workers end up having to hand most of that "cash" directly back to the land-owning classes for rent (among other things). Homeowners could cash out on their investments and remain housed by getting jobs and renting, like the rest of us, which of course they won't do, because they recognize how exploitative the system is and that they earn more just sitting on property. Anyway you look at it homeowners come out way ahead every time, for doing absolutely nothing.

deleted 5y ago
[deleted]
lotsofpulp 5y ago
> Anyway you look at it homeowners come out way ahead every time, for doing absolutely nothing. Homeowners in less demanded areas do not.
- sybarita 5y ago
  I mean sure, and some "workers" make 500k/year, but these are obviously exceptions to the rule when we've established that California homeowners made more money in equity on average than workers made in income. Also pretty sure there aren't many places in California where owning a home is such a liability that your annual losses would exceed those of one renting a comparable property. You might still have to work, but you're still ahead of someone who has to work and pay rent.
  - deleted 5y ago
    [deleted]
- ethanbond 5y ago
  They reliably come ahead of the laborers in those same areas
5y ago

jollybean 5y ago

Buying and selling a house isn't that much harder or riskier than changing jobs, but it's a little besides the point. We are in a form of inflation. The 'middle class' are the problem here. Why? Because they think 'they're making bank'. What they don't realize is that 'everyone above them' on the scale, is making even 'bigger bank'. The $3M home owner realizes this, but also not quite how much the $25M home owner is also screwing him. This is a 'class warfare ponzi scheme' where everyone up the chain is screwing everyone below them. The problem is that it's politically untenable to take away something from the middle class, they are voters. If working class and poorer people coordinated their voting power, the kind of Fed policies we have would be different.